The Saudi Labour Law serves as the cornerstone of employment regulations within the Kingdom of Saudi Arabia, ensuring fair practices and rights for both employers and employees. Article 77 is particularly significant as it outlines the legal framework for employment contract termination and the subsequent compensation, playing a pivotal role in maintaining a balanced employment landscape.
Overview of Article 77
Article 77 of the Saudi Labour Law delineates the conditions and procedures for terminating employment contracts, emphasizing the rights of employees to receive fair compensation under specific circumstances.
Provisions for Termination and Compensation
- Termination Conditions: Article 77 allows employers to terminate employment contracts under certain conditions without facing legal repercussions.
- Compensation Calculation: The article specifies the formula for calculating the compensation owed to employees upon termination, ensuring they receive fair remuneration for their service.
Key Provisions of Article 77
Conditions for Contract Termination
| Condition | Description |
|---|---|
| Performance | Inadequate job performance despite warnings |
| Misconduct | Acts of misconduct that breach company policy |
| Operational Changes | Redundancies due to operational changes or downsizing |
Compensation Calculation
The compensation under Article 77 is calculated based on the employee’s tenure and monthly wage, ensuring a fair settlement for the terminated employment. The formula generally considers the following factors:
- Service Duration: The total number of years the employee has served the company.
- Monthly Wage: The average monthly wage of the employee, which includes basic salary and other fixed allowances.
Example Calculation:
For an employee with a monthly wage of SAR 10,000 and a service duration of 5 years, the compensation would be:
Compensation = Monthly Wage x Service Duration = SAR 10,000 x 5 = SAR 50,000
This structured approach to termination and compensation as per Article 77 ensures transparency and fairness in the Saudi employment sector, safeguarding the interests of both parties involved.
Legal Implications of Article 77
Article 77 of the Saudi Labour Law has significant implications for both employers and employees, shaping the legal landscape of employment relations in Saudi Arabia.
For Employers
Legal Grounds for Contract Termination
Employers are provided with a clear legal framework to terminate employment contracts under specific conditions outlined in Article 77, reducing the risk of legal liability when such actions are justified and properly executed.
Best Practices for Compliance
- Documentation: Maintain thorough documentation of employee performance, conduct, and any disciplinary actions taken to justify contract terminations.
- Clear Communication: Ensure clear communication of job expectations, company policies, and potential grounds for termination to all employees.
- Fair Process: Follow a fair and transparent process for termination, including warnings and opportunities for improvement, to avoid disputes.
For Employees
Understanding Rights and Entitlements
Article 77 ensures that employees are entitled to fair compensation upon termination under certain conditions, protecting their rights and providing financial security.
Steps to Take if Unfairly Terminated
- Internal Review: Initially, seek to address the issue through internal company channels, such as HR departments or grievance committees.
- Legal Consultation: If internal resolution fails, consult with a legal expert specializing in labour law to understand your rights and options.
- Formal Complaint: File a formal complaint with the Saudi Ministry of Human Resources and Social Development or the competent labour court.
Understanding the legal implications of Article 77 is crucial for both parties to navigate the employment landscape in Saudi Arabia effectively, ensuring fair treatment and minimizing disputes.
Article 77 vs. Other Labour Laws
The Saudi Labour Law encompasses various articles that govern employment relationships, with Article 77 being a key provision related to contract termination and compensation. Understanding how it compares to other articles can provide deeper insights into employment regulations in Saudi Arabia.
Article 77 and Article 80: A Comparative Analysis
Article 77 primarily deals with the compensation employees are entitled to when their contracts are terminated under conditions not related to their personal conduct or performance. It ensures that employees receive fair compensation based on their service duration and monthly wage.
Article 80, on the other hand, outlines the circumstances under which an employer can terminate an employee without the obligation to provide end-of-service benefits. These circumstances typically involve misconduct or violations by the employee that justify immediate termination.
| Aspect | Article 77 | Article 80 |
|---|---|---|
| Focus | Compensation upon contract termination for reasons unrelated to employee’s conduct. | Conditions allowing for contract termination without compensation due to employee’s conduct. |
| Compensation | Specifies a formula for calculating compensation based on service duration and monthly wage. | No compensation is required for terminations under the conditions specified. |
| Conditions | Economic downturns, organizational restructuring, etc., that are beyond the employee’s control. | Misconduct, breach of contract, or actions that significantly harm the employer’s interests. |
| Legal Implications | Employers must ensure proper documentation and justification for termination to avoid disputes. | Employers need to provide evidence of the employee’s misconduct or breach to justify termination without compensation. |
Understanding the distinctions and applications of Articles 77 and 80 is crucial for both employers and employees to navigate the legal aspects of employment terminations and compensations effectively.
FAQs on Article 77
Q1: What constitutes valid reasons for termination under Article 77?
A1: Valid reasons include organizational restructuring, economic downturns, or other business-related circumstances that necessitate workforce reduction, not related to the employee’s personal conduct or performance.
Q2: How is the compensation calculated under Article 77?
A2: Compensation is typically calculated based on the employee’s monthly wage multiplied by the number of years of service. Specific conditions and caps may apply, as outlined in the Labour Law.
Q3: Can an employee contest a termination they believe is unjust under Article 77?
A3: Yes, employees have the right to contest terminations they deem unfair. They can initially seek resolution through internal grievance procedures and, if necessary, escalate the matter to the Ministry of Human Resources and Social Development or the competent labour court.
Q4: Does Article 77 apply to all employees, including expatriates?
A4: Article 77 applies to all employees under the Saudi Labour Law, including expatriates, unless specific contractual agreements or international treaties dictate otherwise.
Q5: Are there any exceptions to the compensation rule under Article 77?
A5: Exceptions may include cases where the termination is due to the employee’s gross misconduct or breach of contract, as outlined in other articles of the Labour Law, such as Article 80.
Q6: How does Article 77 interact with end-of-service benefits?
A6: Compensation under Article 77 is in addition to any end-of-service benefits the employee is entitled to, unless the termination falls under conditions that exempt the employer from providing such benefits, as per other Labour Law provisions.
Understanding the nuances of Article 77 is crucial for both employers and employees to ensure fair practices and compliance with the Saudi Labour Law.
16 Responses
What if you’re manager just want you to be involved even with out enough evidence that you are really part of that major cause/problem,the manager is just playing safe for his sake…can it be possible for me to have no end of service benefits?
I resigned from company before two month of my contract end(with two month notice period).
My total service is 1 year and 10 month.
What is my End of service benefits?
Can employer deduct my two month salary as I resigned two before of end contract?
if the company sending me India before completed agreement period from the Saudi Arabia.
Is my company provide me air ticket.
My company terminate my contract under article 77, for the reason manpower reduction.. I start to company last february 2024 and my last duty is on October 2024, what was my rights for said termination..
My employer end my contract with article 77 however the computation of my compensation is wrong base on the article 77 , i work the company for 6years and my salary is 9000 riyals how much should be my compensation
I terminate my contract with resign notice period 2 months and it’s not end of contract kindly remember
I found a better job opportunity and I want to avail it
But my sponsor told me you need to finish contract otherwise you will be in problem
Greetings,
Does an employee have the right to leave the office for 1 or 2 days in search of a JOB during the termination period and last working day is 30-May-2024
Hi,
i am an expat working with one of the saudi retail chain since march 2015.
Last month my contract was renewed and as per contract i applied for my annaul vacation which started from 6th april 2024 and ends 16th may 2024 .
During my vacation company terminated my contract and informed me that 6th of may will be my last working day and sent the letter on my personal email while i was on vacation .
Reffering article 77 royal decree .
It will be Greatful if you could give your expert opinion on this subject .
Hi, dear Respected Sir,
I am facing problems with my current employer, since February I haven’t received my salary and for March and April I worked remotely from Qatar with management approval (WhatsApp) now I came back to Saudi on May 10 since then I requested my salary and still I did not receive,
I went to Qatar for a reason that I explained to the Manager and he agreed,
now my employer is giving every day only promises, and my Family & Kids, are suffering due to having no salary for 4 months.
My contract with the company is for 2 years and I joined in November 2023,
my probation period was 3 months which had already been completed.
please advise me with details or call me on my contact 0574753786.
Thank you very much.
What is the full calculation of end service, reason is terminate the contract by employer but the contract will expire 12 months more, did the company pay the remaining balance of months according to the end of contract?
Hi,
I am working here in a reputed bakery company and I joined the company in the year 17.05.2016 .
I have been completed service more 8 years in here .
I wants to resignation because I have better offer from other company and I will go final exit and i wants to come back on the new company visa .
If I will serve 60 days notice period to my current company.
Can company have right to reject my resignation?
How much company can change to me if my contract is not completed?
End of contract date 17.05.2025
Iqama valid-16 Sep 2024
Basic salary 4400
Plz advise
In my Qiwa it shows my old position and old wage in the company and I got promoted to a higher role with higher wage and my company did not update the changes under my account in Qiwa and suddenly they decides to let me go for a reason of downsizing & I still have 8 months Left in my current contract. Would you please enlighten me what would be the basis of my separation fee, should they pay me 8 months as per contract or is it only 2 months as per article 77?
Would really appreciate your prompt response.
What about going to resign to due crunic illness,, iam 5year now in saudi arabia….
I have full time contract with my company. If i resigned before one year service, now my company is asking the remaining month salary. is there any rules i must pay the amount? and if i pay should i get the local transfer or not?
Hi alothmanlaw.sa administrator, Thanks for the in-depth post!
Hello,
I want to resign to my employer and he dont want me to let go, instead he said that i need to pay him. I am working to him almost 10months but i dont want to continue due to some of problem specially my salary has always delayed in 2 months and my overtime they did’nt pay proper also they remove my health ensurance. What could i do sir?